Williams

(WMB) - Get Report

has lost a fresh round in its battle to show that it is the "anti-Enron."

Federal documents, kept confidential until Thursday, provide new evidence that Williams may have intentionally manipulated electricity prices during the California energy crisis of 2000. The Federal Energy Regulatory Commission released the private file -- which includes damaging discussions between Williams and power producer

AES

(AES) - Get Report

-- after a U.S. judge ruled this week that full disclosure was in the public interest.

Tulsa money manager Fredric E. Russell, upon viewing the report, immediately compared the company to Enron.

"Williams has long maintained that its culture is worlds apart from Enron, and that it did not endorse or condone the manipulation of electricity prices," Russell said. "But this FERC report makes you wonder just how different from Enron Williams really is."

Behind the Scenes

The 17-page file offers a rare, behind-the-scenes glimpse of questionable marketing strategies that may have triggered artificial power shortages in California and put millions of extra dollars in Williams' pockets. The data focuses on a four-week period during the spring of 2000, when two AES-owned "reliability" plants -- whose power is marketed by Williams -- went off line for questionable repairs. With price-capped electricity from those plants unavailable, California was forced to pay Williams 10 times more for electricity from AES plants with no price restrictions.

Among the report's most damaging contents are excerpts from phone calls between employees at Williams and AES. During these discussions, Williams appears to nudge AES to keep the plants out of service for as long as possible.

Rhonda Morgan, Williams' outage coordinator at the time, explained in the FERC report that Williams would receive a premium for power from its other unrestricted plants. "That's one reason it wouldn't hurt Williams' feelings if the outage ran long," she said in an excerpt of a phone call.

That year, Williams would go on to double its annual profits and nearly triple the income from its energy services division.

Swinging Away

Williams, defending itself against the FERC report on Friday, admitted that Morgan's phone conversation was "inappropriate." The company said it reassigned Morgan, who was later let go in a round of layoffs. But it described her as a good employee and continued to maintain its stance that it did nothing wrong in California.

Russell, who liquidated a large position in Williams after losing faith in management, shook his head at the company's stubborn claims of innocence.

Russell marveled that Williams, unlike many other energy traders, has yet to make sacrifices in its executive suite. He also criticized the company's top brass for continuing to collect huge salaries while laying off thousands of rank-and-file employees.

CEO Steve Malcolm enjoys an annual salary of $4.2 million, while William Hobbs -- the leader of Williams' beleaguered trading division -- picks up an even more handsome $4.7 million.

"There has been no regret or no compunction on the part of Williams," Russell said. "Perhaps Williams needs to effect a cultural revolution by replacing some of the executives who can't seem to understand the significance of these events in California."

Under the Hood

The FERC report comes as a fresh blow to Williams, which celebrated a major settlement with California only days ago. The company had hoped to put the California scandal behind it by trimming more than $1 billion from the value of its long-term power contracts with the state.

Just Thursday, Malcolm promised analysts that they "won't see Williams' name associated" with California investigations if the settlement goes through, as expected, next month. But some critics stopped believing management long ago.

"With Williams, you've always got to wonder what's next," said Peter Cohan, a Massachusetts author and investment strategist with no position in the stock. "We keep peeling layers and layers away from the onion, but we never seem to get the truth from these people."

Russell, for one, predicted more bad news to come.

"Today's FERC report strongly hints that there are many more cockroaches still to emerge at Williams," he said.

News of the report hammered Williams' stock, pushing it down 10% to $2.50 in Friday afternoon trading. AES weathered a similar pounding, falling 9% to $1.40.

Both companies have seen their market value chopped by 90% since Enron collapsed into bankruptcy last year.